Hedge funds are the most bearish on commodities prices in at least 13 years as fears of a deeper economic slowdown cast doubts on demand for everything from crude oil to metals and grains.
Money managers piled a combined net-short position of almost 153,000 futures and options across 20 raw-material markets in the week ended last Tuesday (Aug 6), according to US Commodity Futures Trade Commission data compiled by Bloomberg. That’s the most on record, based on figures going back to 2011.
The move underscores a major shift in sentiment since pandemic-era disruptions in supplies and talks of a commodity super-cycle rushed speculators into a record bullish bet in 2021. A slowdown in China – the biggest demand growth engine for the past two decades – and a rebound in production have since eroded investor appetite for raw materials. Recent market turmoil caused by US recession fears exacerbated the move, prompting investors to flip their net commodity bets to bearish for the first time since 2016.
“Commodity futures speculators are short for good reason,” said Mike McGlone, a Bloomberg Intelligence senior commodity strategist, citing rising supplies of energy and agricultural commodities, declining China demand and a stronger dollar as “solid price headwinds”.
“It’s a bear market,” he said.
The Bloomberg Commodity Spot Index, which tracks futures of energy, metals and agricultural commodities, has fallen almost 11 per cent since 2024’s high in May.
Early last week, WTI crude futures tanked below US$73 a barrel, the lowest in six months, after the global financial market rout weighed on risk assets. The sell-off outweighed heightened geopolitical tensions in the Middle East and a production outage in Libya, which removed around 270,000 barrels a day from the market. BLOOMBERG
